Allentown water, sewer bidders reduced to six

A final bid on the proposed lease is expected to be before City Council by March.

January 16, 2013|By Emily Opilo, Of The Morning Call

Allentown officials have narrowed the field of bidders for a proposed water and sewer lease and are preparing a final request for bids, officials told City Council on Wednesday.

City Finance Director Gary Strathearn said negotiations are ongoing with six groups interested in leasing the city's water and sewer systems for a 50-year term.

Mayor Ed Pawlowski proposed the lease in hopes of getting a $150 million to $200 million payment that could be pumped into the city's underfunded employee pension plans.

The original field of nine bidders was reduced to seven by September. The interested parties at the time were private water companies Aqua Pennsylvania, American Water and United Water; the local Lehigh County Authority; National Development Council, a nonprofit community development organization; and two investment firms, Access Capital and Macquarie.

Since then, the investment firms have dropped out, Strathearn said. Another bidder, Allentown Forward, which was initially eliminated, has re-entered the race after meeting additional standards, officials said.

With the approval of council, the city released a request for bids to the interested groups in November. After conversations with the bidders, city officials began to revise that request. A new version will be submitted soon, Strathearn said.

Asked by council how many of the remaining bidders the city would likely be working with, Strathearn said it depends on how close the figures negotiated by competing bidders were.

"More than likely it's going to be just the one," he said.

A final bid is expected to be before council for a vote by March, officials said at a previous meeting.

Resident Julie Thomases questioned whether the city would publicize the revised bid request, but officials were unable to give her an answer. Strathearn said the documents may be protected because they are involved with the bidding process.

Thomases also questioned whether the city would still be able to collect a royalty fee with the deal. In a proposed agreement, the city asked for a $4.5 million royalty fee to assist with expenses if revenue from the water and sewer systems goes elsewhere.

Council President Julio Guridy said that the agreement is a work in progress.

"The more things you ask for upront, the less you get as a payout for the agreement," he said.

Councilman Peter Schweyer said there is still a royalty fee included in the plan, but how much that fee will be or whether it will be cut is unknown.